Basis

FEATURED ARTICLES ABOUT BASIS - PAGE 4

MUMBAI: Banks and the Reserve Bank of India seem to be on a collision course on how base rates are to be computed, with the regulator determined to push its way, while banks resist saying it may not be prudent to do so. The central bank has proposed that base rate — the rate below which banks cannot lend to even their best customers — be computed on the basis of the marginal cost of funds rather than the average cost. Banks, however, have questioned the practicality of the proposed formula.

NEW DELHI: Reliance Industries has raised $1 billion in debt through a 10 year bond issue at an interest rates considered lowest in Asia and with almost no new-issue premium. "The Notes will be denominated in US dollars, and will bear fixed interest of 4.125 per cent per annum, with interest payable semi-annually in arrears," RIL said, adding the funds will be utilised for ongoing capital expenditure. This is the "lowest coupon ever achieved by an Asia ex Japan corporate issuer in the BBB category for a 10 year issuance with a size of $1 billion or more" the company said in a statement.

NEW DELHI: The Reserve Bank will be able to go in for 75 basis points rate cut in the coming months as it is expected to comfortably meet its 6 per cent inflation target for January 2016, says a report. Of the total, 50 basis points cut is expected within a couple of months, said the Standard Chartered report. According to the global financial services major, the revised inflation readings released on February 12, with 2012 as base year, shows that inflationary pressure was "lower than initially suggested".

MUMBAI: Commercial banks would be better positioned to achieve the mandated priority sector lending targets with the Reserve Bank of India (RBI) including many more sector such as agriculture-warehousing, social infrastructure and renewable energy in the ambit, but it may dent their earnings. On Thursday, the RBI revised the priority sector lending (PSL) norms - which mandate banks to lend atleast 40% of the total loans to farmers, small businessmen, students, exporters and small ticket home loan buyers.

NEW DELHI: Anupam Yadav , a non-government official, was today appointed as Officer on Special Duty (OSD) to Minister of State for Home Affairs Kiren Rijiju . Yadav has been appointed at the level of Deputy Secretary on contract basis in the personal staff of the Minister, said an order issued by the Appointments Committee of Cabinet. The appointment of Yadav, who has already joined the Minister's office, will be effective from June 23, for a period of four years or on co-terminus basis with Rijiju's tenure, the order said.

As with most PSU banks, asset quality remains an important concern for IDBI Bank as well. The 28% fall in net profit during the fourth quarter of 2012-13, compared with that in the same period last year, was mostly because of increased provisioning. The fourth quarter provisions jumped 217% to Rs 869 crore on a year-on-year basis. With a fresh addition of Rs 2,960 crore to restructured assets and fresh slippage of Rs 907 crore in the fourth quarter, the stressed assets continue to remain high.

The Reserve Bank of India was vested with powers to resort to selective credit controls as early as in 1949. However, it did not use this tool for quite some time. Since prices were stable, it was not beyond issuing general advice to banks to exercise caution in their lending operations in general and against the security of certain specified commodities and shares in particular. It was only since the middle of 1956 that the Bank began to operate systematically the directive powers vested in it under the Banking Regulation Act, the first commodity so covered being paddy and rice.

Rising interest rates are always associated with expensive loans and an overburdened borrower. But this is just one side of the coin. The other side of the coin reflects the rising deposit rates, which have added some zing to this safe investment instrument. The bank fixed deposit rates (FDs) have increased in the range of 0.25-1 .5% across tenors. So is this the time to book fresh deposits or break your old one to benefit from the new rates? Should You Keep Your Old FD?

MUMBAI: The Reserve Bank today released a database that will give information about the location, population group, authorised dealer category and licence details of branches and offices of commercial banks. "Users of this database can search for bank branches /offices on the basis of the name of the centre, some key words in the address and combinations of state/district/bank. "The information in this branch locator will be updated on a daily basis. The information is downloadable in excel format from this branch locator," RBI said in a notification.

MUMBAI: The RBI has allowed banks to compound interest on a monthly basis, reversing an earlier decision asking banks to charge interest on a monthly compounding basis. However, the RBI has stated that banks should adjust their interest rate on loans in such a way that interest rate chargeable at monthly rests, should not exceed the effective rate as per quarterly rests. The new norms, which ensures that the effective interest rate payable by the borrower does not go up due to the swtichover to the system of charging/compounding interest at monthly rests, is effective from the quarter beginning from July 1. Banks have the option to compound interest at monthly rests, effective either from April 1 '02, July 1 '02 or April 1 '03. Suppose, a bank is charging in a borrower's account an interest rate of 12% with quarterly rests, the effective rate is 12.55%.